BACKGROUND
Since 1986 Hong Kong has had separate status in GATT as
a full Contracting Party (CP).
1.
2. For over a year a GATT Working Party has been examining China's application to accede to GATT (or, more strictly, to
resume her former seat). This spring the WP moved from fact-gathering to actual discussion on terms. The eventual terms of accession depend on the process of economic reform
in China, and crucially on introduction of a pricing system
compatible with GATT free market principles.
3.
Recent events in China have thrown her economic policies
into doubt. GATT is not used for political statements but other participants saw no purpose in proceeding with the WP
at least until the future of economic reform in China was
clearer. A meeting planned for July 11 was postponed, and
no other date set.
4. The definition of China's territorial extent for GATT
purposes had become an issue. We need to ensure that this
does not prejudice Hong Kong's separate status.
5. Earlier this year the US discussed bilaterally with
China a draft protocol of accession to GATT which was shown
informally to others including the UK. This dealt with the
Hong Kong question in a clumsy and insensitive way (in the
same paragraph as Tibet) that would clearly have reopened the 1986 GATT agreement. In subsequent exchanges with the US it became clear that the issue was opened up by accident
rather than design; but it is now on the table even though
all US/Chinese contacts on the GATT application have
stopped.
It will have to be dealt with sooner or later.
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